FAQ

Estate planning is a process of putting your affairs in order.

One of the key benefits of successful estate planning is that it yields a comprehensive analysis of your personal and family situation and your assets and provides for the distribution of your estate in a comprehensive manner. Successful estate planning can provide certainty and direction at a difficult time of transition.

Estate planning allows you to protect yourself, your loved ones, and your assets, during your lifetime (including situations if you become incapacitated) and after your death. Estate planning also can help you to minimize the expense and taxation that can accompany the transfer of assets. Estate planning also covers the disposition of your remains and directions for anatomical gifts.

The process involves the counsel of professional advisors who are familiar with your goals and concerns, your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker. The goals are to maximize the enjoyment of your estate during your lifetime and your beneficiaries’ enjoyment of the estate after your death.

The core document most often associated with this process is your will or living trust.

If you die intestate (without a will), your state’s laws of descent and distribution will determine who receives your property by default. Simply put, the state writes a will for you. The laws vary from state to state, but typically the distribution would be to your spouse and children, or if none, to other family members.

In CA, the intestate descent and distribution would be:

• With a surviving spouse: Spouse receives all of decedent’s community property and part of separate property. The remaining separate property will be distributed to children, grandchildren, parents, grandparents, siblings, nieces, nephews or other close relatives.
• If not married: Assets will be distributed to children or grandchildren, if any, or to parents, siblings, nieces, nephews or other close relatives.

The above plan may reflect your actual wishes, but probating your estate without a will could prove to cause undue delay and hardship on your grieving family.

Dying without a will would not, moreover, provide for other family members not recognized by intestacy laws, give a gift to your favorite charity, or distribute your estate in the way you would have wanted. A will allows you to alter the state’s default plan to suit your personal planning and protects your family from added stress and uncertainty during a difficult time.

A will provides for the distribution of your property upon your death in the manner you choose (subject to laws of some states that prevent disinheriting a spouse and, in some cases, children). There are certain types of property, however, that are not subject to your will such as certain joint property, life insurance, retirement plans and employee death benefits, unless they are payable to your estate.

There are varying types of wills. If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will. If the will establishes one or more trusts, it is often called a testamentary trust will. Alternatively, the will may leave probate assets to a preexisting living trust, in which case it is called a pour over will. The purpose of the trust arrangement is to ensure continued property management for the surviving family members, to provide for charities, and/or to minimize taxes.

Aside from providing for your spouse and children, there are a number of other important objectives that may be accomplished in your will.

• You may designate a guardian for your minor child or children if you have survived the other parent or in case you and your spouse die simultaneously.
• You may designate an executor of your estate in your will and eliminate the need for a bond. In some states the designation of an independent executor will eliminate the need for court supervision of the settlement of your estate.
• You may choose to provide for a child (e.g., stepchild, godchild, etc.) in whom you have an interest, an elderly parent, other relatives, or individuals.
• You may include provisions to protect your pet.
• You may choose to support religious, educational, and other charitable causes.

A will does not govern the transfer of certain types of assets, called nonprobate property, which by operation of law or contract pass to someone else on your death (whom you have named as a beneficiary).  These types of property include certain joint property, life insurance, retirement plans and employee death benefits, unless they are payable to your estate.

A revocable living trust (also known as a “living trust” or “inter vivos trust”) allows you to to put your assets in a trust created during your lifetime, which can be revoked or amended whenever you wish to do so. The choice of a living trust should be made after consideration of a number of factors.

You can also create an “irrevocable” living trust, but that is permanent and unchangeable and is almost exclusively done to produce certain tax results.

In a revocable living trust, your or someone in whom you have confidence manages the property for the benefit of you or your family. Most people name themselves trustees, and find there is no difference between managing the trust and managing their own property. Upon your death, the trustee is generally directed to either distribute the trust property to your beneficiaries, or to continue to hold it and manage it for the benefit of your beneficiaries. Like a will, a living trust can provide for the distribution of property upon your death. Unlike a will, it can also (a) provide you with a vehicle for managing your property during your life, and (b) authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose.

A living trust is one of the main ways to avoid probate. Living trusts also maintain your privacy more than wills, since there’s typically no public record required (as in a will).

Probate is a court-supervised legal procedure that winds up a person’s legal and financial affairs after death and distributes a person’s estate either according to your will or intestacy laws (if there is no will). As a verb, “probate” is also used to mean the process of settling an estate. In this sense, probate means the process by which assets are gathered, applied to pay debts, taxes and expenses of administration, and distributed to those designated as beneficiaries in the will. The executor or personal representative named in the will is in charge of this process, and probate provides an orderly method for administration of the estate. The executor is held accountable by the beneficiaries (and sometimes is supervised formally by a probate court). The executor is entitled to a reasonable fee or commission. Tax laws generally focus the responsibility for death tax filings and payments on the executor under a will. Thus, the choice of an executor is an important one.

Probate proceedings are conducted in the Superior Court for the county where the decedent lived, and take take at least six months and sometimes as long as several years. There are also various fees associated with probate, such as executor and lawyer fees, court costs, and other fees.

Powers of attorney give one or more persons the power to act on your behalf. The power may be limited to a particular activity (e.g., closing the sale of your home) or general in its application, empowering one or more persons to act on your behalf in a variety of situations. It may take effective immediately or only upon the occurrence of a future event (e.g., a determination that you are unable to act for yourself).

A Power of Attorney meets an important estate planning objective to prepare for situations when you may not be able to act on your own behalf due to absence or incapacity. Such a disability may be temporary (e.g., due to travel, accident, or illness) or it may be permanent.

If you do not have a Power of Attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act for you, referred to as guardians or conservators. With a Power of Attorney, you choose who will act and define their authority and its limits, if any.

Choose someone whom you trust. Many people name their spouses or one or more children (if not a minor). You should name a successor agent to address the possibility that the person you name as agent may be unavailable or unable to act when the time comes.

A living will, also known as a medical directive or an advance health care directive, is your written expression of how you want to be treated in certain medical conditions. Depending on state law, this document may permit you to express whether or not you wish to be given life-sustaining treatments in the event you are terminally ill or injured, to decide in advance whether you wish to be provided food and water via intravenous devices (“tube feeding”), and to give other medical directions that impact the end of life.

The health care proxy (also known as the health care power of attorney) appoints an agent to make decisions regarding your health on your behalf when you are incapacitated. (Note that this is different from a durable power of attorney (or financial power of attorney) which appoints an agent to make financial decisions on your behalf when you are incapacitated.) Without such directives, someone who is not of your choosing will be making the most important decisions about your life. As a result, those decisions will not necessarily be made the way you would have made them. Your family may also find it necessary to obtain court orders to deal with your medical situation.

Their purpose is to allow you to express your preferences concerning medical treatment at the end of your life. These documents provide your expressed wishes, rather than making the family guess your desires, which eases the burden on your family during this stressful time. They also provide your physician with a written expression from you as to your medical care and designate for the physician the person he or she should consult concerning medical questions.

The federal estate tax is a tax on any transfer of assets from a deceased person’s estate to his or her heirs, except for transfers to spouses.

Each estate has an exemption from the tax that will increase each year until 2026, when the exemption will return to around $6M (unless Congress passes new law). The exemption amounts are as follows:

All of the assets owned by the deceased person are subject to the estate tax, including cash, stocks and bonds, the family home, tangible personal property such as jewelry, as well as property in joint tenancy, living trusts, IRAs, and life insurance.

Estate planning takes the federal estate tax into account and can help shelter much of your money for you and your loved ones.

It varies depending on the complexity of the plan and whether all information necessary has been gathered. If you have completed the questionnaire and all questions are answered, the process could take as little as 4-6 weeks (see below for the steps of estate planning). Emergency cases can be expedited.

In my practice, there are 3 main steps to estate planning.

Step 1: Clients complete the questionnaire:
We ask you to complete the questionnaire before our first meeting. When we meet, we can get to know each other and talk about specific estate planning issues and how to best meet your goals. This meeting typically takes 1 1/2-2 hours.

Step 2: We draft your custom plan:
Next, we draft your plan, thinking about only you and what you want accomplished. We do not copy and paste from another client’s plan inserting your names in the document. Each plan is drafted with care. You review the documents and let us know if you have changes to or questions regarding the documents.

Step 3: We review and sign the final documents:
My office prepares for the final signing by printing documents and putting together your binder, wallet cards, and the letter of wishes, and other things. You come in for the final signing and we mail you the originals and copies. My office also keeps electronic copies of your documents on file. You’re now protected! My office also furnishes you with a USB stick with electronic copies of your estate planning documents

You should review your estate plan every 3 years. But if you experience a transitional event like a birth, death, divorce, marriage, or YOU’VE WON THE LOTTERY, you should revisit your plan earlier. We encourage you to contact us whenever you have a question or concern about a change of status.

We ask for a deposit, and we charge on an hourly basis, sending monthly invoices for work performed. The deposit is credited toward the final invoice.